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Challenges Facing the Battery Logistics Industry - Part One

Electric vehicles are revolutionising transportation by offering safer and more environmentally friendly options for travel. Price Waterhouse Cooper ‘Autofacts’ expects that 55% of all new vehicles sold by 2030 will be fully electrified.

2020 was an exceptionally good period for the electric car market. To emphasise this success, September 2020 saw a 184% increase in pure-electric registrations compared to the previous year and PHEVs expanded by 139%. However, 2021 has performed even better.

Global EV sales rose by around 140% during the first quarter of 2021, compared to the same period in 2020.  Europe accounted for around 450,000 of these vehicles while China exceeded even this figure with sales of 500,00 vehicles.  The USA saw sales double when compared to the first quarter of 2020.

It has become widely accepted by the automotive logistics industry that the growth of the EV sector is exceeding expectations. Figures from the United Kingdom highlight these trends. According to the SMMT (the Society of Motor Manufacturers and Traders), the increase in battery-electric cars saw a record month in September 2021 (32,721 units and 15.2% market share), which established an all-time record.  An increase of 36% year on year.   The SMMT also highlighted that the UK plug-in sector share grew to 21.7% which is one of the best performances EV’s have ever achieved.

With increasing demand for electric vehicles for both the consumer and business sectors, the need for more EV batteries will naturally increase at the same rate.  As such, it is critical that everyone involved in the supply chain fully appreciates the challenges being faced and the steps being implemented to ensure a stable future supply. 

From manufacturing to end-of-life, specialist logistics skills are essential for efficiency, economies of scale and safety. DHL enables every stage of battery logistics, linking raw material suppliers to battery cell and pack makers, as well as electric vehicle manufacturing and aftersales to recycling and disposal.

The current batteries used for electric vehicles make extensive use of rare-earth metals that include lithium hydroxide, nickel, manganese, and cobalt.  There are two specific concerns regarding the supply of these metals that need to be thought through.  The first is the actual supply of the raw materials and the second is the transportation of these materials to the battery manufacturers.

All participants of the value chain—especially powertrain suppliers, automotive OEMs, battery manufacturers and mining companies, need to anticipate the complexities of this swiftly-changing sector.  In particular, all participants in the supply chain will need to pay attention to the ethical supply of these elements.  A leading German car manufacture recently announced that it has partnered with an external watchdog to safeguard that the raw materials needed for the production of its electric vehicle batteries are responsibly sourced.

Logistics companies have historically relied on being able to establish reliable transportation networks based on the stability of supply and demand.  However, as the demand for EV batteries increases, it is highly likely that the supply of components will shift at short notice – the result of changing geographical suppliers and the impact of emerging technologies.

Logistics companies will need to take some important steps to prepare for this growing market. Where supply and demand are stable, they will need to optimise transportation routes to minimise haulage costs and establish well-accepted protocols and practises to meet government standards whilst minimising red tape – a real risk in highly developed western countries. Key to this is for Logistics companies to take the lead with regard to optimisation and CO2 emissions.

Where geopolitical issues, such as the source of Congolese cobalt, may impact the supply chain, it is critical that Logistics companies design their transportation and supply networks to have exceptional flexibility.

While the raw materials are an essential part of the matrix, how and where these substances are processed will be of crucial importance. Organisations from OEMs to logistic companies need to focus on the changes taking place in the marketplace.

According to leading industry publications, vehicle manufacturers and governments are committed to investing in regional supply chain and gigafactory networks for lithium-ion batteries.  Conscious that a high percentage of EV battery production is based in China, a considerable distance from points of use for European and American manufacturers, the race is on to establish battery factories and supply chains across Europe and North America.

Developing a vigorous and adaptable EV battery supply chain will progressively provide a competitive advantage in the evolution of vehicle electrification. As of November 2021, It is estimated that there are least 100 new gigafactories scheduled for development in the critical automotive manufacturing regions across Asia, Europe and North America.

Logistics companies will need to structure their supply chains to meet the needs of the producers and the manufacturers accepting that, in the future, they may well be the same organisation as OEMs seek to build in security of supply and production resilience.

Other areas related to the rapid emergence of gigafactories and the transportation of EV batteries will include, Component supplier analysis, use of battery management systems, use of thermal management systems, and smart packaging. As Science Direct 2021 points out; 

Finally, the responsible course of action for logistics organisations is to closely monitor the industry for disruptive technology and production developments that could cause a rapid shift in transportation network requirements. 

For example, many battery manufacturers are looking intensively at ways to produce EV batteries with alternative materials.  A single significant breakthrough could radically change the patterns of supply and demand.   As Identified by PwC the solution will based on information technology that can, to a great extent, predict where the pressure points will emerge. This will become recognised as digital fitness.

In the next part of this article we will look at seven of the most important challenges facing the EV Battery logistics industry.  For more information click here.


Exploring the Electric Vehicles Future

EV TV is here to explore the EV future and discover what is evolving in the world of electric vehicles 2020 to 2050. This series of electric vehicle videos will look at all aspects of EV technology, myths, and logistics. We will investigate electric vehicle range, batteries, benefits and how this will all impact the environment.  We will be releasing new videos and podcasts monthly, so join us on our journey as we discover how the future is electric.